*China’s current boom should not obscure the fact that the maintenance of the Bretton Woods system requires China to accept both dangerous levels of domestic monetary growth that put its future economic health at greater risk and large capital losses on its dollar reserves.*

I don't make shit. My wife doesn't either. We live within our means though. WE LIVE WITHIN OUR MEANS. WE LIVE WITHIN OUR MEANS. We're not reckless spenders. Both have advanced degrees and go on crazy vacations. Take some damn responsibility for your actions! Gramm is right. Sorry, he is. It's easy for a wise ass to tell a poor bastard he's fucked.

So what is the practical effect of this on people like me? That's not a rhetorical question. I'm honestly wondering what average folks should be doing. Obviously we should live within our means. But is that enough?

Tom, the video URL got cut off -- could you post just the last part of it, or possibly embed the link?

MMB, I just got an email from a woman who is thinking of moving some money from Wachovia, because the FDIC insures only the first $100K of deposits. I don't know that we're at that point -- I think Wachovia is too big too fail, and has valuable parts (e.g. investment business) that make it attractive to a buyer -- but the fact people are asking shows their concern -- and the risk of a bank runs.

I'm not a financial advisor, but it seems prudent to batten the hatches -- pay down debt, save a little extra, and think about where your retirement account might be safest. Suggestions, anyone?

This may be a really dumb question, but I wonder what would happen to the economy if instead of giving billions to the financial institutions and speculators whose greed was responsible for getting us in to this sub-prime disaster we provided assistance directly to the affected homeowners. Enabling them to get back into financial position to repay their loans and maintain healthy fully-occupied neighborhoods, it seems to me, would benefit the whole economy--psychologically as well as financially.

As I understand it, the individual assistance now in the pipelines will help only a few hundred thousand when the true forthcoming foreclosure rates are up in the millions.

I'm no economist (though I do balance my checkbook every month and do not owe a penny to anyone), so I may be waaay off the wall here. But I'd love to hear what you all have to say.

Elizabeth, if you're suggtesting that the government should practice accountability on corporate leadership by making sure that they do profit from the collapse...it is an excellent idea. However, it is not going to happen until the US electorate learns to toss elected representatives from office when they make decisions driven by lobbyist influence and cash instead of making decisions based on what is good for their electorates.
If electors want their representatives to follow different behaviour patterns, they need to apply severe pressure by primarying them out of office, de-funding them and funding opponents. And voting for intelligent third party candidates instead of voting for the two major parties would also be a majorly beneficial shift.
The political system has been subverted for years to operate for the benefit of corporations. To change that, electors need to get tough with elected representatives who try to perpetuate those behaviours.

Graham: While I mostly agree with your political analysis, that's not quite what I was looking for. I'm just curious as to what the economics would be if the financial bailout (I know, I know...) were directed to homeowners rather than corporations.

In my opinion, we need a stronger dollar policy, which has benefits beyond just economic ones. However, reversing the downward spiral of the dollar will negatively effect the trade deficit and make US exports more expensive (thus less attractive). Trade deficit shrinkage and cheaper US exports are two current benefits of the weak dollar that make policymakers reluctant to intervene. When will that policy change, and what will the negative effects be when that happens? One wonders...